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Focus On Earnings Plays - Important Economic News Wed

Posted by Pete Stolcers on April 15

Posted 9:30 AM ET – Earnings season has started and the market needs a catalyst. The headwinds are strong and the S&P 500 is 2% from its all-time high. Banks posted excellent results Friday and they will dominate the scene this week. Higher interest rates have been good for the financial sector.

The bid typically remains strong through mega cap tech stock earnings. Those high growth companies spark optimism and sellers will be passive until they report. Stocks are trading at the upper end of their valuation range and excellent results are priced in.

Trade negotiations with China are going well. Rumor has it that this will be more comprehensive than initially expected. We should see an agreement within this month.

Brexit has been extended by six months and it won’t have an impact until the fall.

Traders will be watching China’s numbers on Wednesday (industrial production, retail sales and GDP). As long as economic growth in China remains stable, the market will tread water.

Thursday morning flash PMI’s will be released (EU and Japan).

Swing traders are long a half position of SPY. Keep your intraday stop to $287. Earnings guidance and economic releases will be critically important. Analysts believe that this will be the first quarter and three years where profit margins contract. The uptick in China’s economic activity needs to be confirmed Wednesday morning.

Day traders should favor the long side. The market is flat before the open and this could be a dead day. If the first hour range is compressed, keep your trading very light. This is a shortened trading week. Look for stocks that have broken through longer-term horizontal resistance on strong volume. These stocks will have momentum and they won’t need a market tailwind.

Look for individual earnings plays. I have some searches for these and a pattern that I like to trade. This is what the chat room will focus on this week. I’m not expecting any big market moves.
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